So long, suckers — I’m leaving Wall Street

Commentary: Some lessons from 15 years observing the industry

NEW YORK (MarketWatch) — After covering the tobacco industry for three years in North Carolina, I moved to New York in 1997 to cover a really dirty business: Wall Street.

Fifteen years after I made that switch, I’m moving on again. More on that in a moment.

Wall Street, like just about everything else, including me, has changed a lot in that time. Also, it hasn’t changed a bit. What follows are 15 takeaways from my time living in New York and covering the financial industry and the markets.

Simple is better: For 60 years, a 37-page document kept the financial system relatively safe. It was called Glass-Steagall. In the 13 years since it was repealed in the name of modernization, we’ve seen a tech bubble and the greatest financial crisis since the stock-market crash of 1929.

You can’t time the market: Also, technical analysis is phooey. Momentum plays are foolish. Anyone who wants to sell you a plan to beat the market is full of baloney. Investing schemes are exactly that. As I’ve written before, some people will tell you that you can hedge your bets. But insuring trades has never made sense to me. If you have to spend money to hedge a bet, it probably means you can’t afford to invest the money.

When it comes to markets, what can go wrong, will, and bubbles happen. The problem is we never know which is which until it’s too late.

Timing is everything: Market journalism should be written in two ways. The first would give you the trader’s perspective. The second would be for the long-term, buy-and-hold investor. Too often, we’re caught up in the daily fluctuations in our portfolios. What really matters is what the investments are worth when we need them.

John Wordock/MarketWatch

Pay is the problem on Wall Street: Why is it that we know the names of Kweku Adoboli, Jerome Kerviel, Ina Drew, Bruno Iksil and Nick Leeson but not the names of all of the “rogue” traders who pulled off massive gains on their speculative bets? The answer, obviously, is that winners get promoted. Only losers are hung out to dry.

Too cozy for comfort: It’s less of a problem since the financial crisis, but the business media are still too cozy with the powerful on Wall Street to do their jobs correctly. The media still fawned over Wall Street stars such as Jamie Dimon at J.P. Morgan Chase & Co.
JPM, -0.74%
; Eliot Spitzer, former New York governor and attorney general, and Jimmy Cayne of Bear Stearns. Why? They all dished tips or dirt on their rivals. Access journalism still dominates the landscape, and you — the reader — suffer for it.

Mutual funds are a waste of time: The fund industry was my first beat in New York. Here’s how it was explained to me: You buy a fund. The fund trails its index but you pay a management fee and other fees that are usually diminishing returns. You will pay a fee to buy the fund, or exit it, or both. Index and exchange-traded funds are the best thing to happen to investors since cash.

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